Hutong neighbourhoods, composed of Chinese courtyard dwellings (Siheyuan), are historically and socially significant urban spaces that embody the traditional Chinese way of life and philosophy. As part of the national heritage, there is an increasing research interest in Hutong neighbourhoods, many of which are facing oblivion. This study presents a formal grammar for Hutong neighbourhood generation. This research investigates traditional principles of urban planning of ancient Beijing, based on examples on the historical map Qianlong Jingcheng Quantu, to derive the lost design rules. These rules are used to build up a procedural modelling framework, which reveals the development of Beijing’s urban structure from the Yuan (1271–1368) to the Qing (1644–1911) dynasty. Our findings present a grammar incorporated into the procedural modelling framework to parametrically generate Hutong neighbourhoods, which replicates the morphological characteristics of historic cases. It contributes to the understanding of the generation of Hutong neighbourhoods. In support of heritage sustainability, this grammar can be implemented in a computational environment by visual scripting that enables the generation of new instances of Hutong neighbourhoods, both real and virtual.